San Mateo County Grand Jury
• 2008-2009
Issue | Background | Findings | Conclusions | Recommendations | Responses | Attachments a Water District Without Water
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 16 findings
F1
Since the sale of the water system to CalWater in 2005, LTCWD has not been involved in any manner in the delivery of water to its residents.
No recommendations for this finding
F2
Although it no longer provides water, LTCWD is still considered a water district. It continues to receive a portion of the property taxes paid by residents. The LTCWD 1 LAFCo’s legislatively mandated role is to oversee orderly growth and development of the various agencies. LAFCo is required to review periodically the agencies and make a determination of whether an agency should be considered as: a) Status Quo, the entity does not want or cannot exceed the current area of service, b) Expanded, the entity is expected to expand its physical boundaries and service area at some time, or c) Zero, the district is planning on or should take steps to dissolve. Board recognizes that it receives property tax revenue because it is a water district, which is chartered to deliver and remove water as a service to its residents.
No recommendations for this finding
F3
In the most recent fiscal year, 2007, LTCWD revenue from property taxes was $209,966.
No recommendations for this finding
F4
The water rates in the LTCWD decreased by 14% for Los Trancos Woods and Vista Verde residents, and 39% for Blue Oaks residents following the sale to CalWater.
No recommendations for this finding
F5
Since the transfer of the water distribution business to CalWater in 2005, CalWater, in conjunction with LTCWD, has been responsible for setting water rates for Los Trancos residents. At the time of transfer, CalWater agreed to administer rebate programs on behalf of LTCWD. a. Under the Water Cost Offset Program, approximately 40% of LTCWD’s share of property tax revenue is rebated to Los Trancos and Vista Verde residents in the form of reductions in water charges. b. Another 10% of LTCWD’s share of property taxes is rebated to residents in the form of incentives related to homeowner water conservation investments.
No recommendations for this finding
F6
Section 30000 of the Water Code does not limit a water district solely to the acquisition and delivery of water. A water district may provide services, including wastewater collection and disposal, garbage collection, fire protection, and recreational services related to district owned lands.
No recommendations for this finding
F7
Two unimproved parcels and a small reservoir were excluded from the CalWater sale. These properties are currently zoned as residential. LTCWD primarily focuses on the areas of wild-land fire prevention, emergency preparedness, encouraging water conservation, and managing the three properties retained after the CalWater transaction.
No recommendations for this finding
F8
The LTCWD reservoir is located near a pond owned by the Town of Portola Valley. The reservoir can be reached by a short trail that is owned by LTCWD and is connected to longer recreational trails owned by the Town of Portola Valley.
No recommendations for this finding
F9
According to LTCWD Board meeting minutes, residents wish to maintain the land and reservoir, which were retained by LTCWD in a natural state for recreational use. The LTCWD’s board has made unsuccessful attempts to reach an agreement with a potential successor agency to maintain the property. 3
Related Recommendations (2)
R1
The San Mateo County Local Agency Formation Commission (LAFCo) work directly with the Los Trancos County Water District Board in identifying an agency that will take over the ownership and management of the two unimproved parcels and the reservoir.
R2
The Los Trancos County Water District Board (LTCWD) seek advice from legal counsel on the most appropriate approach to the property tax transfer to one or more agencies to ensure the tax transfer remains in effect for the benefit of the residents after dissolution. This will then enable the Board to: a. Secure an agreement with another agency to own and manage the three parcels of property, b. Apply for the re-zoning of the property to assure that the wishes of the residents are achieved, c. Identify those activities it is currently engaged in that are deemed essential to Los Trancos Woods residents and pursue agreements with other, agencies to continue those activities. Agreements may need to include the transfer of some LTCWD property tax revenue to fund these activities on behalf of Los Trancos Woods residents into the future, d. Determine how the needs of local residents would best be served, i.e. by transforming LTCWD into a “recreation and parks district”3, or working with a residents association to encompass some LTCWD activities, and 3 A “recreation and parks district” is a class of special districts that provides community recreation, park, and open- space facilities and recreation services within specified boundaries and under local control. 7 e. Work with LAFCo to pursue dissolution of LTCWS as a water district, once successor agency agreements and property tax transfers are completed to the satisfaction of the residents.
F10
The Town of Portola Valley, the Woodside Fire District, San Mateo County, and the Mid-Peninsula Regional Open Space District are agencies in the Los Trancos area which could provide services now provided by LTCWD.
No recommendations for this finding
F11
The LTCWD Board is the only governmental body currently representing the specific and unique needs of Los Trancos Woods and Vista Verde residents.
No recommendations for this finding
F12
California State Revenue and Tax Code Section 99.02 permits an agency to transfer property tax to another agency if the original agency determines that it no longer needs the tax revenue.
No recommendations for this finding
F13
An opinion from the State Attorney General, #05-809, published February 9, 2006, said, “Hence, it is evident from this legislative history that the current language of section 99.02 is intended to authorize local agencies to enter into agreements changing the property tax revenue allocation as between them in the absence of a jurisdictional change.” The opinion quoted the analysis of AB 241 which said, “The purpose of this bill is to give local government more flexibility in their own fiscal affairs. There could be a number of reasons why an agency would want to give some of its property tax to another. Its revenue picture or service needs may change over time so the fixed amount of property tax is no longer needed.” (Assem. Floor, 3d reading analysis of Assem. Bill No. 241 (1985-1986 Reg. Sess.) as amended July 9, 1985, pp. 1-2.)
No recommendations for this finding
F14
The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Gov. Code § 56000), specifies that procedures for a dissolution of a special district may be commenced by the district, by petition of voters or by LAFCo. In the case of a dissolution initiated by LAFCo, Section 57113 requires LAFCO to submit a dissolution measure to the voters if LAFCo receives a petition prior to the conclusion of the protest hearing signed by at least 10% of the landowners or voters in the affected territory. If a district initiates dissolution procedures for itself, LAFCo must still submit the dissolution to the voters if a petition of protest is submitted, signed by at least 25% of the landowners or voters in the affected territory. (California Government Code Section 57081).
No recommendations for this finding
F15
Prior to Proposition 13, a special district that had reduced costs or decided to dissolve would decrease or eliminate its property tax. In the post-Proposition 13 environment, if an ESD is dissolved, property tax rates for district residents are not decreased. Instead, the tax revenue from that district is then reallocated to other agencies serving the area previously served by the dissolved agency. Because the property taxes are not reduced, this can act as a disincentive for a district to dissolve, even if its primary role has ceased. 4
No recommendations for this finding
F16
In 2006, LAFCo documented a number of determinations regarding LTCWD in its Municipal Service Review (Appendix 1), including: a. “Water rebates benefiting Los Trancos customers of California Water Service Company detract from the District’s ability or a successor agency’s ability to fund other services it might be able to provide and from the ability to pay down existing debt.” b. “Use of property tax to provide rebates conflicts with the legislature’s intended use of property tax and competes with other potential uses for property tax to fund services that might more equitably benefit the broader community.” c. “Opportunities exist to partner with the Town of Portola Valley, Mid-Peninsula Regional Open Space District, and the Woodside Fire Protection District in pursuing goals of land stewardship and these agencies also have the potential to respond to other identified needs such as emergency preparedness and passive recreation.”2 d. “A district that no longer delivers the service for which it was formed and collects property tax that is no longer needed to fund services should consider dissolution.” e. “The District is encouraged to actively pursue transfer of land with potential successor agencies.” f. “Continued existence of the district should include consideration of a sunset date for use of property tax as rebates in order to fund necessary services the district is authorized to provide.” Conclusions The 2008-2009 San Mateo County Civil Grand Jury concludes that:
No recommendations for this finding
Additional Recommendations 6
These recommendations are not explicitly linked to specific findings.
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R3Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Gov. Code § 56000)
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R4California State Revenue and Tax Code Section 99.02
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R5Water and Waste Disposal Enterprise Special District Property Taxes; Analysis of the 2008 – 2009 Budget Bill, California Legislative Analyst’s Office (Appendix 2)
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R6Opinion from the State Attorney General, #05-809, published February 9, 2006
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R7Guide to Special District Laws and Related Codes; California Special Districts Association, 2007
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R8Los Trancos County Water District Board Meeting Minutes, 2006 – 2008 8
Conclusions 12
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CL1 Page 6Some current LTCWD services overlap with services of other agencies, such as wild-land fire prevention by the Woodside Fire Prevention District. 6 11. The residents of the LTCWD service area would be best served by the LTCWD Board working with other agencies to transfer its land and reservoir, the delivery of services, and appropriate funding from property tax revenue.
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CL2 Page 5Since the sale of its water system to CalWater, LTCWD has had no role in supplying water to its residents.
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CL3 Page 5Water districts are given a share of the property tax collected from the residents of the service area to reduce a district’s cost in acquiring and delivering the water consumed by 2 “Passive recreation” may be defined as a non-motorized activity that: offers constructive, restorative, and pleasurable human benefits and fosters appreciation and understanding of open space and its purpose; does not significantly impact natural, cultural, scientific, or agricultural values; requires only minimal visitor facilities and services directly related to safety and minimizes passive recreation impacts. 5 the residents. Contrary to the original purpose of the property tax revenue, LTCWD is using 50% of its tax revenue share to reduce water rates to LTCWD residents.
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CL4 Page 6If a legislative budget committee is aware that a district, such as LTCWD, is no longer providing water service but is receiving a share of property taxes, the Legislature may legislate dissolution of the district. In the event of dissolution, LTCWD may or may not have the opportunity to transfer a portion of future tax revenue to another agency for services directly benefiting Los Trancos Woods residents.
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CL5 Page 6The Water Code authorizes water districts to engage in a variety of secondary activities, such as waste collection and disposal, management of passive recreation facilities, and operating fire protection facilities.
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CL6 Page 6In the case of a district like LTCWD, where the agency is no longer involved in its primary activity, which is the delivery of water, it is questionable whether the agency should engage in secondary activities.
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CL7 Page 6The two unimproved parcels of land and small reservoir still owned by LTCWD are currently zoned as residential, thus subject to potential development. Rezoning of the properties as “passive recreation” or dedicated open space would protect the land from development.
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CL8 Page 6LTCWD has made a good faith attempt in previous years to locate a steward for the two unimproved parcels of land and the reservoir for the benefit of the residents by entering into discussions with the Town of Portola Valley, the Woodside Fire District, San Mateo County, the Mid-Peninsula Open Space District and the Peninsula Open Space District.
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CL9 Page 6The California Revenue and Tax Code provides a mechanism for a special district to transfer some or all of its future property tax revenue to another agency. This transfer could enable services that are now provided by LTCWD, and which are important to the residents of the District, to continue after dissolution.
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CL10 Page 6Revenue transfer to another agency might not be available to LTCWD if dissolution or reallocation of property tax revenue from water districts resulted from a legislative act.
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CL11 Page 7The residents of the LTCWD service area would be best served by the LTCWD Board working with other agencies to transfer its land and reservoir, the delivery of services, and appropriate funding from property tax revenue.
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CL12 Page 7Once the transfer of services, property, and property tax revenue has been successfully completed, the LTCWD Board should be able to gain resident support for agency dissolution. Then, the LTCWD Board can present its plan for dissolution to LAFCo.
No Responses Found 2
Government entities assigned to respond to this report. No response documents have been linked in our database.
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